Saturday, September 17, 2011

"The America Invents Act" - Another Non-Solution

Obama just recently signed into law "The America Invents Act", which is another piece of useless legislation that will adversely affect the economy in the long-run. Click here for a brief summary of the "The America Invents Act". My essential concern with this bill is that it is an administrative band-aid; not a fundamental re-thinking concerning what deserves to be eligible for patent protection. Business plans, software, cloud concepts, and natural products such as genes should not be eligible for receiving patent protection. Eliminate the eligibility for these types of activities to receive patent protection and allow the concept of prior-art to have a a real effect on the decision making process; the workload of the patent office will drop dramatically.

When this type of legislation to protect so-called "intellectual property" is passed into law, it damages the free market system. This type of legislation is essentially designed to protect dying business models that should be allowed to gracefully exit the economy. Mike Masnick noted that "Nearly all of the good ideas were excised in the process, and you can
tell that's true by the fact that no actual tech company appeared with
the President at the signing. Instead, it was chemical and pharma
companies -- old school legacy industries that are trying to "protect"
old businesses, not innovate with the new."

Lets dig a bit deeper into the Mike's comment that innovative companies weren't at the signing ceremony. By coincidence, the September 26, 2011 issue of Forbes had the following article: "Out Sourced Forever, Why Amazon can't make the Kindle in America" by Stephan Denning. (Unfortunately this article does not yet appear to be available on the Forbes website at this time.) The significance of Mr. Denning's article is that as we loose our capacity to manufacture high tech product here in the US, that the creators of those products will leave the US to work in the attractive overseas markets. In other words, brain drain.

If innovation is moving overseas, that means that patents will also be moving overseas. If we continue in the US to pursue a "strong" patent regime it won't take long for the overseas companies to start seeing the monetary benefits of formulating their own "strong" patent system. In the end, we will loose when we have to start paying these companies exorbitant licensing fees. The hand writing is on the wall, neither our politicians nor business leaders seem to be aware that they are pursing a suicidal policy by insisting on "strong" patent protection. Be careful of what you ask for. It may bite you.

As a final jab. The political right taunts the phrase: "“That government is best which governs least.” ( I actually agree with the phrase). Derived from that logic, the political right assets that the government stay out of our personal lives and the economy. The political right then goes on to say that entitlement programs for the poor are "bad", regulations are "bad", and that consumer protection is "bad". If all these things are "bad" why do we need welfare and protection for private businesses? My take; if a business cannot compete in the free-market without government protection, too bad. It goes out-of-business.